IO Interactive Reclaims Project Fantasy, Shuts Istanbul Studio

IO Interactive announced on X that it now holds full ownership of Project Fantasy after Xbox ended its external financing partnership, and that the studio will shut down its Istanbul office, cutting about 40 jobs.

Full rights to Project Fantasy after Xbox pullout

The statement said the termination of the funding agreement means IO Interactive owns all intellectual property, characters and world‑building elements associated with the project. It added that development and financing will continue under the studio’s own budget, alongside other ongoing work.

Having the complete IP lets the Danish studio set direction, scope and schedule without outside constraints. In the past, developers that lose publisher backing often face delays or cancellations, but revenue from the Hitman series and the recent success of 007: First Light give it a stable financial base.

Project Fantasy remains in development, though no details on platforms, release windows or gameplay have been disclosed. The shift to self‑funding could push the timeline back, as the project now competes for internal resources with updates to existing titles.

Istanbul studio closure and job cuts

IO Interactive also confirmed the closure of its Istanbul studio, which will result in 40 layoffs. “We had to find a new balance for the long‑term future of the studio, focused on the success of our main internal core titles,” the company said. “This has meant the closure of our Istanbul studio and starting a process to part ways with colleagues.”

The announcement did not include information on severance packages, support for displaced staff, or whether any Istanbul‑based roles might continue remotely. The decision was described as “tough but necessary” to secure the studio’s future and give Project Fantasy a solid foundation.

Xbox’s broader restructuring, revealed last week, includes 1,600 immediate layoffs across the gaming division and a projected total reduction of about 3,200 positions by July 2027. The changes involve spinning off studios such as Compulsion Games, Double Fine, Ninja Theory and Undead Labs, and cuts at Bethesda, ZeniMax, id Software, Activision, Obsidian and the Accessibility Team.

Xbox is refocusing on core franchises like Fallout, Elder Scrolls, Doom, Quake and Wolfenstein. Project Fantasy was among several externally funded projects affected; earlier this year Xbox also withdrew funding from 1666: Amsterdam.

For players, the immediate impact appears limited. The only public information about Project Fantasy is its existence as an IP; no official announcement has been made about which consoles or PC it will target.

The loss of external financing may test IO Interactive’s ability to keep the project on schedule. The studio’s track record with high‑profile releases suggests it can absorb the financial hit, but the lack of a publisher’s marketing muscle could affect visibility when the game finally launches.

Future steps will likely involve reallocating staff and budget from the Istanbul office to core projects. If the company can maintain momentum on Project Fantasy while delivering updates to its established franchises, it could show that self‑funded development is viable in the current market.

Analysts will watch IO Interactive’s progress as a case study of how mid‑size developers adapt to the changing environment of publisher support.